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Unico American Corporation Reports Fourth Quarter and Full Year 2016 Financial Results

CALABASAS, Calif.--(BUSINESS WIRE)--

Unico American Corporation (NASDAQ – “UNAM”) (“Unico,” the “Company”), announced today its consolidated financial results for the three and twelve months ended December 31, 2016. For the three months ended December 31, 2016, revenues were $9.0 million and net income was $0.6 million ($0.11 diluted earnings per share) compared with revenues of $8.7 million and net loss of $0.2 million ($0.05 diluted loss per share) for the three months ended December 31, 2015. For the twelve months ended December 31, 2016, revenues were $35.3 million and net loss was $1.4 million ($0.26 diluted loss per share) compared with revenue of $33.3 million and net loss of $1.2 million ($0.22 diluted loss per share) for the twelve months ended December 31, 2015.

Stockholders’ equity was $68.9 million as of December 31, 2016, or $12.98 per common share including unrealized after-tax investment gains of $0.008 million, compared to stockholders’ equity of $70.3 million as of December 31, 2015, or $13.23 per common share including unrealized after-tax investment losses of $0.03 million.

“Our fourth quarter had no surprises; it was better than the third quarter but not good enough to satisfy our growth and profit objectives,” said Cary L. Cheldin, Unico’s President and Chief Executive Officer. “Although the 2016 year’s financial results were disappointing, the work we did in 2016 serves as a solid foundation for our long term future success. In addition to continuing our work with independent strategic advisors, we also engaged investment advisors, IT advisors, marketing firms, and a product development firm. We are working towards improved growth and profitability moving forward.”

Headquartered in Calabasas, California, Unico is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty and health insurance through its agency subsidiaries; and through its other subsidiaries provides insurance premium financing and membership association services. Unico has conducted the majority of its operations through its subsidiary, Crusader Insurance Company, since 1985. For more information concerning Crusader Insurance Company, please visit the Crusader’s Web site at www.crusaderinsurance.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained herein that are not historical facts are forward-looking. These statements, which may be identified by forward-looking words or phrases such as “anticipate,” “believe,” ”expect,” “intend,” “may,” “should,” and “would,” involve risks and uncertainties, many of which are beyond the control of the Company. Such risks and uncertainties could cause actual results to differ materially from these forward-looking statements. Factors which could cause actual results to differ materially include underwriting actions not being effective, rate increases for coverages not being sufficient, premium rate adequacy relating to competition or regulation, actual versus estimated claim experience, regulatory changes or developments, unforeseen calamities, general market conditions, and the Company’s ability to introduce new profitable products.

 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
 
December 31 December 31

2016

2015

(Unaudited)

ASSETS

Investments
Available for sale:

Fixed maturities, at fair value (amortized cost: December 31, 2016 $80,372; December 31, 2015 $82,203)

$ 80,384 $ 82,161
Short-term investments, at fair value   10,205   15,641  
Total Investments 90,589 97,802
Cash and restricted cash 13,496 8,259
Accrued investment income 186 86
Receivables, net 6,008 5,505
Reinsurance recoverable:
Paid losses and loss adjustment expenses 261 751
Unpaid losses and loss adjustment expenses 9,521 9,637
Deferred policy acquisition costs 4,432 4,233
Property and equipment, net 10,283 10,221
Deferred income taxes 1,177 1,334
Other assets   2,269   2,343  
Total Assets $ 138,222 $ 140,171  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Unpaid losses and loss adjustment expenses $ 47,056 $ 49,094
Unearned premiums 19,375 18,079
Advance premium and premium deposits 224 212
Accrued expenses and other liabilities   2,661   2,443  
Total Liabilities $ 69,316 $ 69,828  
 
Commitments and contingencies
 

STOCKHOLDERS' EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and outstanding shares 5,307,133 at December 31, 2016, and 5,315,945 at December 31, 2015

$ 3,761 $ 3,743
Accumulated other comprehensive income (loss) 8 (27 )
Retained earnings   65,137   66,627  
Total Stockholders’ Equity $ 68,906 $ 70,343  
 
Total Liabilities and Stockholders' Equity $ 138,222 $ 140,171  
 
 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share)
   
Three Months Ended Twelve Months Ended

December 31

December 31

2016

 

2015

2016

 

2015

(Unaudited) (Unaudited) (Unaudited)

REVENUES

Insurance company operation:
Net premium earned $ 8,085 $ 7,717 $ 31,356 $ 29,574
Investment income 222 165 881 479
Net realized investment losses - (7 ) (1 ) (7 )
Other income   16   65     218     375  
Total Insurance Company Revenues 8,323 7,940 32,454 30,421
 
Other insurance operations:
Gross commissions and fees 675 708 2,738 2,774
Investment income - - - -
Finance fees earned 18 18 69 66
Other income   1   2     7     4  
Total Revenues   9,017   8,668     35,268     33,265  
 

EXPENSES

Losses and loss adjustment expenses 4,845 5,289 22,827 19,163
Policy acquisition costs 1,753 1,713 6,895 6,465
Salaries and employee benefits 946 1,184 4,926 4,853
Commissions to agents/brokers 40 40 162 167
Other operating expenses   519   800     2,572     4,351  
Total Expenses   8,103   9,026     37,382     34,999  
 
Income (loss) before taxes 914 (358 ) (2,114 ) (1,734 )
Income tax expense (benefit)   317   (110 )   (710 )   (552 )
Net Income (loss) $ 597 $ (248 ) $ (1,404 ) $ (1,182 )
 
 

 

PER SHARE DATA:

Basic
Earnings (loss) per share $ 0.11 $ (0.05 ) $ (0.26 ) $ (0.22 )
Weighted average shares 5,307,133 5,326,301 5,307,694 5,335,540
Diluted
Earnings (loss) per share $ 0.11 $ (0.05 ) $ (0.26 ) $ (0.22 )
Weighted average shares 5,307,837 5,326,301 5,307,694 5,335,540
 
 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
 
Twelve Months Ended

December 31

2016

 

2015

(Unaudited)
Cash flows from operating activities:
Net loss $ (1,404 ) $ (1,182 )
Adjustments to reconcile net loss to net cash from operations:
Depreciation and amortization 483 341
Bond amortization, net (16 ) (19 )
Non-cash stock based compensation 23 23
Loss on asset impairment - 1,287
Net realized investment losses 1 8
Bad debt expense 6 (1 )
Changes in assets and liabilities:
Net receivables and accrued investment income (609 ) (377 )
Reinsurance recoverable 606 (5,024 )
Deferred policy acquisition costs (199 ) (350 )
Other assets 297 218
Unpaid losses and loss adjustment expenses (2,038 ) 4,697
Unearned premiums 1,296 1,472
Advance premium and premium deposits 12 (38 )
Accrued expenses and other liabilities 218 (543 )
Income taxes current/deferred   (85 )   (561 )
Net Cash Used by Operating Activities   (1,409 )   (49 )
 
Cash flows from investing activities:
Purchase of fixed maturity investments (16,772 ) (57,930 )
Proceeds from maturity of fixed maturity investments 18,618 10,892
Net decrease in short-term investments 5,436 56,618
Additions to property and equipment   (545 )   (1,339 )
Net Cash Provided by Investing Activities   6,737     8,241  
 
Cash flows from financing activities:
Repurchase of common stock   (90 )   (242 )
Net Cash Used by Financing Activities   (90 )   (242 )
 
Net increase in cash 5,238 7,950
Cash and restricted cash at beginning of period   8,259     309  
Cash and Restricted Cash at End of Period $ 13,497   $ 8,259  
 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest - -
Income taxes $ 9 $ 9
 

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